| Reagan mythology is leading US off a cliff |
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| Written by C.B. Forde |
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This is the repost of an article on Aljazeera by Paul Rosenberg The idea that Reagan produced a uniquely booming economy is false First, Reagan's record on the economy was not just exaggerated by his boosters, it's almost exactly the opposite of what they claim. It was a fairly ordinary time by the most common measurements of economic growth, looking good only in comparison with a selective time-slice of the 1970s. But once you start looking beneath the surface even the tiniest bit, the picture turns very dark indeed. In terms of the most basic measure of economic growth - increase in gross domestic product (GDP) - the vaunted "Reagan boom" was an unremarkable period of time. If we look at Reagan's eight years, and compare them with Clinton's and JFK/LBJ's, Reagan comes in dead last, with 31.7 per cent compared with Clinton's 33.1 per cent and JFK/LBJ's 47.1 per cent. Only Nixon/Ford's eight years make Reagan look good, with a mere 26.2 per cent growth. The idea that Reagan brought prosperity is true only for those at the top, not for average American workers If we examine incomes, we discover that Reagan's eight years marked a real take-off for inequality, while average incomes stagnated. The income growth of the top once per cent was ten times that of everyone else during his term: 61.5 per cent versus 6.15 per cent. Under JFK/LBJ, the bottom 99 per cent actually did better: gaining 30.9 per cent compared with 26.9 per cent for the top once per cent. And while inequality continued to rise under Clinton, the bottom 99 per cent did more than twice as well as they did under Reagan, gaining 16.7 per cent compared with 56.6 per cent for the wealthiest one per cent. The idea that Reagan was good for the American economy in general is false Reagan was a disaster for the American economy in at least four fundamental ways: Debtor Nation Status: Under Ronald Reagan, the US went from being the world's largest creditor nation to the largest debtor nation in just a few years - and we have remained the largest debtor nation ever since. In 1981, Reagan's first year in office, the US was a net creditor to the tune of $140.9bn. By 1984, that had shrunk to just $3.3bn - and the next year, the US shifted from being a creditor nation to a debtor nation for the first time in almost 70 years. By 1987, the US was a net debtor by $378.3bn - the largest debtor nation in the world. The figure rose to $532.5bn by the end of 1988, when Reagan left office. De-Industrialisation: While the percentage of industrial jobs in the economy had been declining since the 1950s, with the growth of the service sector, the raw number of industrial jobs continued to increase right up through 1979, just before the 1980/1982 double-dip recession. From that year onward, the number of industrial jobs began declining, with a smattering of years when the number would increase. In addition to the raw number of jobs declining, the number of unionised jobs and the number of jobs with American companies declined even further.Personal indebtedness: The income stagnation that began under Reagan has had a devastating impact on personal savings. While it fluctuated considerably, the personal savings rate had more than doubled between 1949 and 1982, from 5.0 per cent up to 11.2 per cent. Ironically, one of the main stated purposes of the Kemp-Roth tax cuts, the basis for Reagan's 1981 tax cut bill, was to boost personal savings. Instead, they plunged precipitously, falling all the way down into negative territory by 2006. Government Indebtedness: The idea that Reagan was "fiscally conservative" is false. The story of government indebtedness was even more bleak. Before Reagan, debt really wasn't a problem for America. From World War II to 1981, every president had reduced the debt as a percentage of GDP, except for the divided term of Nixon-Ford, which saw a tiny 0.2 per cent increase.
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